Gift tax??

[dnalirol]

What is the name of your state? SC

My in laws are about to become millionaires w/the sale of some prime lake front real estate. They have told me and my husband that they wish to pay off our house when they close on the deal. We owe roughly $235,000 on our home. I have read several things about them being able to gift each member of our family (4) $12,000 each which would add up to $48,000..then I also read somewhere that they could gift us more as long as they didn't go over the set lifetime amount. Just looking to see what is correct and what kind of taxes would have to be paid if this were the case.

Thanks

 

[anteater]

What is the name of your state? SC

My in laws are about to become millionaires w/the sale of some prime lake front real estate. They have told me and my husband that they wish to pay off our house when they close on the deal. We owe roughly $235,000 on our home. I have read several things about them being able to gift each member of our family (4) $12,000 each which would add up to $48,000..then I also read somewhere that they could gift us more as long as they didn't go over the set lifetime amount. Just looking to see what is correct and what kind of taxes would have to be paid if this were the case.

Thanks

With that kind of money, you might suggest to your in-laws that they have a consultation with an estate planner, either CPA, lawyer, or financial planner well versed in that area.

In the meantime, read up at
http://www.irs.gov/pub/irs-pdf/i709.pdf

Using a gift from the grandparents to your children to pay off the house would be iffy.

 

[wdlsguy]

I have read several things about them being able to gift each member of our family (4) $12,000 each which would add up to $48,000.

My understanding:

Your father in law can give your husband $12,000 per year.
Your father in law can give you $12,000 per year.
Your mother in law can give your husband $12,000 per year.
Your mother in law can give you $12,000 per year.

That still comes to $48,000 per year without involving your children.

I am not a lawyer.

 

[xylene]

My understanding:

Your father in law can give your husband $12,000 per year.
Your father in law can give you $12,000 per year.
Your mother in law can give your husband $12,000 per year.
Your mother in law can give you $12,000 per year.

That still comes to $48,000 per year without involving your children.

I am not a lawyer.

That's pretty solid math. It would seem that that is exactly what they can do.

-----

Giving the kids money is not 'iffy'. It is straightforward. It could be to buy a horse... what it is used for does not matter so long as it is under 12,000. (It would matter if for an exempt gift like DIRECTLY paid tution or med expenses...)


Bottom Line:

The in laws NEED to talk to tax pro to help them handle the consequences of their new liquid wealth.

 

[anteater]

Giving the kids money is not 'iffy'. It is straightforward. It could be to buy a horse... what it is used for does not matter so long as it is under 12,000. (It would matter if for an exempt gift like DIRECTLY paid tution or med expenses...)

My "iffy" comment referred specifically to using a gift to the grandchildren to pay off the house. If that ever came under scrutiny, I don't believe that it would pass muster.

 

[xylene]

My "iffy" comment referred specifically to using a gift to the grandchildren to pay off the house. If that ever came under scrutiny, I don't believe that it would pass muster.

That is logical, but not accurate.

The use of the gift is not relevant, only the amount. If it is under 12,000 the gift exempt from gift taxes.